San Francisco, June 10, 2024 – In a move that underscores the escalating tech trade tensions between the U.S. and China, Nvidia has reportedly found a way to ship its cutting-edge B200 AI chips to Chinese clients despite stringent American export restrictions. Sources familiar with the matter reveal that the semiconductor giant has rerouted shipments through third-party countries, ensuring its high-demand processors still reach the lucrative Chinese market.
The B200, Nvidia’s latest AI powerhouse, is a critical component for advanced machine learning and data center operations. With a price tag exceeding $30,000 per unit, industry analysts estimate that the total value of these redirected shipments could surpass $1 billion annually.
How Nvidia Sidestepped the Ban
The U.S. Commerce Department imposed sweeping export controls in late 2023, aiming to curb China’s access to advanced AI and semiconductor technologies. However, Nvidia—which derives nearly a quarter of its revenue from China—reportedly worked with distributors in Southeast Asia and the Middle East to modify supply chains, allowing the chips to eventually reach Chinese tech firms.
"[The B200] is technically compliant with U.S. regulations when initially shipped to intermediary nations," explained a trade compliance expert who requested anonymity. "But once there, local partners relabel and forward the shipments to China without direct U.S. oversight."
Read the full Financial Times report on Nvidia’s supply chain maneuvers here.
Washington’s Response
U.S. officials have expressed frustration over the loophole, with one Commerce Department insider calling it a "blatant circumvention" of export rules. The Biden administration is now reportedly considering stricter enforcement measures, including blacklisting third-party distributors suspected of facilitating the rerouted shipments.
Meanwhile, Chinese tech giants like Alibaba, Tencent, and Baidu—which rely heavily on Nvidia’s chips for AI development—have been stockpiling inventory ahead of further restrictions. "If the U.S. tightens the noose, we’ll see more aggressive domestic chip development in China," said Ming Zhao, a Shanghai-based tech analyst.
What’s Next?
The cat-and-mouse game between regulators and semiconductor firms shows no signs of slowing. Nvidia’s stock (NVDA) dipped slightly on the news, reflecting investor concerns over potential regulatory backlash. Yet with AI demand soaring, analysts predict the company will continue finding creative ways to serve its Chinese clients—unless Washington shuts the door completely.
For now, the billion-dollar question remains: How long can Nvidia outmaneuver U.S. export controls before facing serious consequences?
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